EU proposes to cut farm subsidies, France says unacceptable

PARIS (Reuters) - The European Commission on Wednesday proposed to reduce farm subsidies and leave more latitude to member states under the bloc’s Common Agriculture Policy (CAP), drawing swift condemnation from France, which called the move “unthinkable”.

A farmer drives his tractor in his field as he plants potatoes in Estourmel near Cambrai, France April 26, 2018. REUTERS/Pascal Rossignol

The CAP proposal comes as part of a bigger, new, multi-year EU budget set to trigger battles among member states over how to fill the funding gap left by Britain’s exit next year.

In an effort to cut costs and promote other policies, farmers will see aid shrink in the 2021-2027 period to 365 billion euros ($438 billion), down 5 percent from the current CAP, the Commission said.

This would represent a share of less than 30 percent of the total budget of 1.28 trillion euros in inflation-adjusted prices, down from more than 45 percent 20 years earlier.

“The overall cut in the CAP budget is 5 percent and I regard this as a fair outcome to farmers, particularly given the challenging backdrop of a 12 billion euros Brexit,” European Commissioner for Agriculture and Rural Development Phil Hogan told reporters.

But France, by far the largest beneficiary of the CAP, said the proposals were unacceptable and stressed they were only a starting point for negotiations.

“For Stephane Travert, the Agriculture and Food Minister, such a drastic, massive and blind cut is simply unthinkable,” the ministry said in a statement.

“It poses an unprecedented risk to farms’ viability by seriously impacting farmers’ incomes, for whom direct aid is an essential safety net. France cannot accept any decline in direct income for farmers.”

SUBSIDY CAPPING

In the proposals, which need to be approved by member states, EU countries will have to cap subsidies for large farms — with the Commission suggesting a limit of 60,000 euros — or impose degressive payments depending on farm size, with the rest redistributed by member states to small and medium-sized ones.

Direct payment levels per hectare among member states will also continue to converge towards the EU average, it said.

“The average farmer in all member states will see no cuts in direct payments if this is managed well,” Hogan said.

The Commission also aims to introduce greater conditionality to direct payments with a significant part of funding to be ring-fenced for actions beneficial to the climate, the environment and rural development.

“This system will provide greater flexibility for member states, allowing them to better target environmental objectives and be more ambitious,” it said.

The proposal to give member states more room to maneuver has been criticized by farm unions as a Commission attempt to go back on the CAP’s initial concept as a common policy.

The Commission also proposed a new reserve to address crises linked notably by unforeseeable developments in international markets.

Farmers across the agriculture sector, from dairy to grains and sugar, have suffered sharp drops in revenues in recent years due to hefty global supplies.

EU farmers group COPA-COGECA, reacting on Twitter, expressed “strong disappointment with the cuts”.

“A strong budget is needed for a sustainable, modern EU agriculture sector delivering on various fronts,” it said.

($1 = 0.8331 euros)

Reporting by Sybille de La Hamaide; Editing by Dale Hudson and David Evans